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 Media Release - 2Q20 and 1H20

1H20: Gross revenue R$ 532.6 million,

30.3 million pairs sold

Sobral, August 13, 2020: In this release GRENDENE (BM&FBovespa Novo Mercado: GRND3), publishes results for 2Q20 and 1H20.
Figures are consolidated, and stated in accordance with IFRS (International Financial Reporting Standards).

HIGHLIGHTS OF RESULTS: 2Q20 AND 1H20

1Q20 – Main results and indicators

Change, % Change, %
Results for R$ mn 2Q19 2Q20 1H19 1H20
2Q20 & 1H20 2Q19–2Q20 1H19–1H20
Gross revenue 497.1 82.1 (83.5%) 1,012.4 532.6 (47.4%)
Domestic market 399.5 54.9 (86.3%) 793.0 398.4 (49.8%)
Exports 97.6 27.2 (72.2%) 219.4 134.2 (38.9%)
Net revenue 399.8 56.7 (85.8%) 823.1 428.9 (47.9%)
COGS (244.2) (33.1) (86.5%) (495.0) (252.0) (49.1%)
B3 ticker: GRND3 Gross profit 155.6 23.6 (84.8%) 328.0 176.9 (46.1%)
Operational expenses (145.5) (108.9) (25.1%) (284.4) (222.5) (21.8%)
http://ri.grendene.com.br Ebit 10.1 (85.3) - 43.6 (45.6) -
Ebitda 26.7 (63.2) - 77.0 (2.4) -
Number of shares: Net fin. rev. (exp.) 51.8 45.3 (12.5%) 103.0 35.3 (65.7%)
Common: 902,160,000
Net profit 41.5 (44.4) - 118.0 (14.6) -
Profit per share (R$) 0.05 (0.05) - 0.13 (0.02) -
Price (June 30, 2020):
Volume – million pairs 30.1 4.3 (85.6%) 58.6 30.3 (48.3%)
R$ 7.33 per share
Domestic market 24.7 3.4 (86.4%) 46.3 23.7 (48.8%)
Market value: Exports 5.4 0.9 (82.1%) 12.3 6.6 (46.6%)
R$ 6.6 billion Gross revenue/pair (R$) 16.50 18.92 14.7% 17.26 17.58 1.9%
US$1.2 billion Domestic market 16.16 16.28 0.7% 17.12 16.80 (1.9%)
Exports 18.09 28.11 55.4% 17.81 20.38 14.4%
Conference call Margins – % 2Q19 2Q20 Change, pp 1H19 1H20 Change, pp
Brazilian: Gross margin 38.9% 41.7% 2.8 p.p. 39.9% 41.2% 1.3 p.p.
Aug. 14, at 9 a.m. Ebit margin 2.5% (150.3%) (152.8 p.p.) 5.3% (10.6%) (15.9 p.p.)
Ebitda margin 6.7% (111.4%) (118.1 p.p.) 9.4% (0.6%) (10.0 p.p.)
Connect on: Net margin 10.4% (78.2%) (88.6 p.p.) 14.3% (3.4%) (17.7 p.p.)
- Brazil: +11-3181-8565 or

Conference call Highlights, 2Q20 vs. 2Q19:

International:
Aug. 14, at 9 a.m. (Brasília time). ▪ Net revenue: 85.8% lower YoY.
(Simultaneous translation)
▪ Net loss in 2Q: R$ 44.4 million.
Connect on:
+1-412-717-9627 (USA) ▪ Ebit negative: – R$ 85.3 million
+44-20-3795-9972 (UK)
▪ Gross margin: Increased.
Contacts:
Alceu Albuquerque ▪ Volume of pairs: 85.6% lower YoY, at 4.3 million.
IRO
dri@grendene.com.br
▪ Non-recurring expenses of R$ 56.0 million: Effects of the Covid-19 pandemic (R$ 48.0 mn), plus
provision of R$ 8.0 million for receivables from a client that entered Judicial Recovery.
Tel.:
+55-54-2109-9022

Results for 2Q20 & 1H20 Page 1 of 20

 Media Release - 2Q20 and 1H20

MANAGEMENT DISCUSSION AND ANALYSIS

In contrast to the positive outlook that we had at the beginning of 1Q20, when we projected growth for the year, at the beginning of
2Q20 we were more skeptical, with a high degree of uncertainty on the impacts of a pandemic.
The pandemic caused a countrywide shutdown in the various sectors of the economy, especially in apparel retailing and in services
related to tourism and air travel. The effects were partially felt in the first quarter, since the social isolation measures adopted by states
and municipalities began in the second half of March.
In the second quarter, though, the effects were worse, and intense. April 2020 turned out to be the most critical month, with severe
impacts on the Brazilian economy and, in our view, this was when the crisis reached its peak – when the highest levels of isolation and
quarantine happened in Brazilian society as a whole. The first moves to ease the restrictive measures began in May, gradually expanding
and making partial resumption of non-essential activities possible, with opening of commerce in some regions of the country.
Our view is supported by data from the FGV and the IBGE, which indicate that both consumer confidence and retail sales were at their all-
time lows in April. Indicators improved slightly in May and June, but still show a high degree of consumer aversion to making purchases.
In this context, the Brazilian footwear industry was severely affected, especially by the closing of physical stores in the country – the
market that absorbs more than 85% of the sector’s sales. A survey by the Brazilian footwear manufacturers’ association, Abicalçados,
in March and April, showed 95% of physical footwear stores closed. We can also cite other factors that helped deteriorate the sector’s
situation, such as: Cancellation of orders, postponement of invoicing, and an increase in default.
Abicalçados is projecting total footwear sales in 2020 at 30% lower than the 908 mn pairs produced in 2019, with domestic consumption
29% lower year-on-year, and exports 30% lower.
In this context, we focused on ensuring the health and safety of our workers, and on taking action to minimize the impacts on the
Company’s operation as much as possible. Highlights: (i) Collective vacations for the workforce from March 23, 2020 in all our units in
Brazil; (ii) extension of due dates of receivables in the domestic market for 30 days, for invoices payable between March 23 and April
17, 2020, without extra charges – in the second quarter we engaged in individual negotiations, including subjects such as receivables
from the export market, dealing with each case in accordance with the client’s need; (iii) analysis of our financial investments – we
were successful in avoiding losses; and (iv) production of more than 1.7 million items of protection equipment for health and security
professionals in more than 270 municipalities – underlining our role as a corporate citizen company.
As one of the main players in the sector, Grendene was also hit hard by the pandemic, in spite of the efforts to attenuate the economic
impact caused by the government’s social isolation measures.
On the demand side, decisive factors were: Closing of physical retailers in general, loss or reduction of consumers’ income; and fear of
unemployment, and uncertainty on the future of the economy, leading to more pragmatic and conscious consumption of non-essential
items such as footwear.
We were especially impacted in terms of demand for our products, due to the various decrees issued by the government of the State
of Ceará (where 100% of our production is located at our units in Fortaleza, Sobral and Crato). The state government suspended
activities considered to be non-essential, and thus prevented us from operating in the state.
When the employees’ collective vacations ended, on April 26, 2020 in Sobral and Crato, and on May 12 in the state’s capital city of
Fortaleza, state decrees prohibited our employees from resuming activity and we dispensed them from attending work, employing a
‘bank of hours’ system representing 30% of their wages, based on a reduction of the working week and payment of 70% of their salaries.
Resumption of activity and production was authorized, and then only partially, only from June 1, in the units at Fortaleza and Crato,
and from June 24 in Sobral, and took place in obedience to the state’s Responsible Resumption of Economic and Social Activities
directive, governing resumption of activities in the state.
During this period in which non-essential activities were suspended, it was possible to supply only some of our sales channels. We sold
existing stock of finished product, and we also produced boots, which were considered to be EPI equipment, and thus used by numerous
economic sectors, including meat packers, agribusiness, supermarkets and public service workers.
The suspension of production during a major part of 2Q20, and the shrinking of demand for the Company’s products, resulted in the
volume of pairs shipped in 2Q20 being 85.6% lower than in 2Q19. In the first half of the year, the number of pairs shipped was 48.3%
lower than in first half 2019 – the fall being spread evenly among all brands, models and geographic locations. Consequently, the other
indicators of financial results (Revenue, Ebit and Net profit) were also severely affected.
In this context, with the lower volume of pairs, gross revenue was down 83.5% YoY in 2Q20, at R$ 82.1 million.
In the domestic market, gross sales were down 86.3% year-on-year, and volume of pairs sold was 86.4% lower, reflecting the small
increase of 0.7% in revenue per pair, year-on-year. Gross revenue in the first half of the year was 47.4% lower than in 1H19.
Sales were severely affected by the closing of physical stores, with the exception of sales of boots, for the reasons explained above.
It was also difficult for the conventional retail sales channels to perform well in 2Q20, due to either closing or limitation on opening of
stores, and the population’s impossibility of going out in the streets to reach them. These channels include specialized footwear stores
or store chains, regional chains selling mainly apparel and footwear, large nationwide store chains, shopping center anchor stores,

Results for 2Q20 & 1H20 Page 2 of 20

 Media Release - 2Q20 and 1H20

department stores, and door-to-door sales using catalogs. The great majority of these channels resumed activities only gradually, and
only in the second half of June, thus severely limiting the performance of our direct sales channels, which historically had provided
52.5% of our domestic volume of pairs sold, this being reduced to 11.6% in the quarter.
On the other hand, the indirect channels (distributors and wholesalers who buy our products for resale to smaller supermarkets and
neighborhood food retailing stores), and self-service channels (major national and international hypermarkets, and large regional
supermarket chains) increased their participation in our domestic sales from 47.5% to 88.4%, due to their being authorized to continue
operating at full rates during the whole of the period. We also saw an increase in average ticket of 7.9%, reflecting the greater demand
for products with higher added value, which previously were sold exclusively in retail stores.
In the export market, gross revenue was down 72.2%, and volume of pairs sold down 82.1%, compared to 2Q19. Gross revenue per
pair increased by 55.4%, due to the depreciation of the Brazilian Real against the dollar. The main reasons for negative performance in
the international market were: Cessation of production, preventing shipment of orders already in hand; cancellation or postponement
of orders due to temporary closure of retailing in the majority of markets; the high level of inventories in distributors and stores, and
consumers’ fear of going out into the streets.
Net operational revenue was R$ 56.7 million in 2Q20, and R$ 428.9 million in 1H20, respectively down 85.8% and 47.9% year-on-year
– mainly reflecting the reduction in the volume of pairs shipped.
Even with the fall in sales, gross margin increased to 41.7% (2.8 percentage points higher than in 2Q19). Cost of goods sold declined by
more than net revenue, due to the lower cost of labor. On the other hand, we believe that the calculation of gross margin may be
inappropriate in both 2Q20 and 1H20, due to the costs of idle time, relating to the fixed costs of factories not operating due to the
government’s social isolation measures to combat Covid-19.
In the second quarter, the Company intensified efforts to adapt its costs and expenses structure. Operational expenses were 25.1%
lower in 2Q20 than 2Q19: they were R$ 36 million lower in nominal terms. We posted non-recurring expenses of R$ 56.0 million
(representing 51% of operational expenses), arising mainly from the effects of the pandemic on Grendene’s operations: (i) Cost of idle
time (R$ 44.4 million); (ii) HR, cleaning and sterilization (R$ 2.1 million); (iii) donations (R$ 1.5 million); and a provision of R$ 8.0 million
in receivables from a client that applied for Judicial Recovery.
In this quarter, Ebit was R$ 85.3 million negative (with Ebit margin negative at –150.3%), representing a reduction of 946.4% in
comparison to 2Q19. Ebit in first half 2020 was R$ 45.6 million negative, representing a reduction of 204.7% in relation to R$$ 43.6mn
positive in 1H19.
For 2Q20 we report net financial revenue R$ 6.5 million lower than in 2Q19. Cash investments produced revenue R$ 22.1 million lower
than in 2Q19, due to the lower CDI rate; and the result of variations in FX rates was R$ 13.6 million lower than in 2Q19. On the positive
side, the sum of adjustments to present value and gains on investments in equities was R$ 29.2 million higher than in the same period
of 2019.
Net financial revenue was R$ 67.7 million lower than in 1H19, comprising mainly the negative result of hedge operations (R$ 63.7 million
lower) and the lower revenue from cash investments (R$ 31.0 million lower). This fall was mitigated by the total of investments in
equities and adjustments to present value being R$ 27.0 million higher than in 1H19.
Importantly, note we do not employ ‘hedge accounting’ policies, and thus losses or gains on foreign exchange transactions are recognized
each month in the profit and loss account – this is not necessarily the case for the effects of FX variations on the object of the hedge: in
our case, the hedge consists of accounts receivable from clients denominated in dollars, and also orders not yet shipped denominated in
dollars. Our hedging practice consists of selling dollars in the futures market on the B3, to protect the future revenue of our exports.
Thus, although there is a negative accounting result in the half year, in economic terms we are guaranteeing an exchange rate on our
exports for the coming quarters. In other words, the FX variation on revenues from exports (present and future) is approximately equal
to, and of the opposite sign to, the result of transactions in dollars on the B3; but their effects are recorded in the accounting at different
moments. On June 30, 2020 Grendene had a balance of US$54.5 million (1,090 contracts) sold on the exchange.
We report a loss of R$ 44.4 million in 2Q20, representing a reversal of 206.8% from profit of R$ 41.5 million in 2Q19. The main reasons
for the lower net profit were: (i) lower volume of pairs sold in the domestic and export markets, and (ii) the effects of the exchange
rate. For 1H20 we report a net loss of R$ 14.6 million, on volume 112.4% lower than in 1H19.
The Company generated operational cash flow of R$ 356.1 mn in 1H20. At the end of the half-year we had a comfortable level of cash,
more than R$ 2 billion. In the present scenario, in which the financial institutions have stopped giving credit, and sales have fallen
drastically, this cash position ensures that the Company will be able to get through this difficult period in relative comfort to comply
with its commitments and design a strategy for when we return to a ‘scenario of normality’.
Finally, we highlight the gradual improvement that we have seen, over the quarter, in the dynamics of orders, suggesting that the worst
of this crisis may have now passed. Although we are still in a scenario of uncertainties, starting in May, and more strongly in June and
July, we have seen a significant recovery in the volume of orders for delivery in July and August, respectively.
In spite of this improvement, we cannot guarantee that the crisis has been overcome, because there are innumerable uncertainties on
the extent of the effects of Covid-19 on the economy, and also on a possible second wave of contagion.

Results for 2Q20 & 1H20 Page 3 of 20

 Media Release - 2Q20 and 1H20

Having said all the above, we would like to close this comment emphasizing that since the end of the first half of the year, we have a
feeling of considerable optimism for 2H20.

HIGHLIGHTS
Digital transformation
We continue to accelerate the process of digital transformation within the Company, begun last year. As we stated in the previous
quarter, digital transformation for us is based on three aspects: Culture, Technology, and Business.
In the Culture component, the objective is to disseminate digital culture, speed, experimentation and fast methods throughout the
Company.
In the second component, Technology, we are reformulating our e-commerce platform, which is currently under the management of
an outsourced partner. During 2H20 we will migrate the present platform to new platforms owned and managed by ourselves. The first
migration is planned to be completed in August.
Finally, the third component – Business – is represented by Bergamota Works, our innovation laboratory. It was created to seek new
ways of accessing the consumer, and to approximate Grendene to the ecosystem of start-ups.

Sustainability Report
In this quarter, Grendene published its first Sustainability Report (‘the Report’), using the Global Reporting Initiative (GRI) methodology,
in which we present the results of a 10-year period of improving our processes, reducing environmental impacts and underlining our
commitment to society.
The Report reflects the importance of sustainability for the Company, and our achievements and efforts to reduce our environmental
footprint. For example, we have eliminated waste of resources within the manufacturing process. All offcuts and/or unused plastic
materials return to the production line. We also see ourselves as an example for water consumption, with one of the lowest water
footprints in the industry. Between 2013 and 2019 we reduced the usage of water necessary for production per pair of footwear by
27%, or the equivalent of 106 Olympic swimming pools.
In this report we also describe the principles and main pillars of our development policy, based on valuing and respecting the individual,
eco-efficient production, and lower-impact products. We also publish some of our certifications and main achievements related to our
sustainable development journey.

Update on the process of exclusion of ICMS tax from the taxable base for calculating the PIS and Cofins taxes
We continue our description of the procedural steps necessary for us to receive compensation for excess tax paid. We filed the
administrative procedure for initial qualification with the national tax authority, applying for R$ 500,980, the total updated to June 30,
2020, in accordance with the best interpretation of our management and our legal advisors – the request was granted on September
19, 2019.
Due to this acceptance, and in the light of the three events – (i) the judgments given by the courts; (ii) the stage of the proceedings in
Special Appeal 574.706; (iii) the motions filed by the tax authority; and (iv) the Solution given to Internal Consultation 13/2018 of COSIT,
the Company has recognized, in Tax credits, the amount of R$ 52,152 as a gain originated from this process. In the judgment of
management and its legal advisers, realization of this amount is practically certain, since it is in line with the most rigorous and restrictive
possible reading of the legal position in this matter at June 30, 2020. The remainder of the claim, (i.e. R$ 448,828) remains categorized
as ‘probable’, but not ‘practically certain’. We note that, in our best judgment, substantial doubts persist on the exact amount of the
gain to be receivable by the Company. On this matter, there was expectation that the Federal Supreme Court would clarify the points
in doubt, including the Application for Modulation, in the plenary session on December 5, 2019, when hearing the Motion for
Declaration brought by the National Tax Authority against the joint judgment in Special Appeal 574.706. However, as is now well known,
the judgment was transferred to the plenary session of April 1, 2020. However, on March 24, 2020 the case was once again withdrawn
from the hearing agenda, due to the Covid-19 pandemic. Consequently, on June 30, 2020, the rest of the claim is still recorded with
chances of success ‘probable’ but not in practice certain, since a revision judgment by the Supreme Court is awaited, for which no date
has been set.

The Investment Committee

In May 2019 the Board of Directors created the Investment Committee, comprising five members, with the primary duty of deciding
the modalities of the Company’s investments. The members of the Committee also have the duties of: (a) evaluating proposals for
financial investments offered to Grendene, within the limits established (i) by the Board of Directors, notably for investments that do
not have collateral in financial institutions and/or federal government securities, and (ii) by the Company’s Bylaws; and (b) issuing
recommendations to the Executive Board as to approval of the transactions presented and analyzed.

Results for 2Q20 & 1H20 Page 4 of 20

 Media Release - 2Q20 and 1H20

The Committee’s philosophy is to aim for long-term appreciation of capital, with diversification of risks and optimization of the
Company’s cash position.
Initially, a limit of R$ 300 million was set for allocation in other modalities of investments, in private credit financial instruments,
including real estate exchanges. However, in April of this year, as announced in a Material Announcement, this limit was increased to
R$ 850 million, permitting investment of the increase (R$ 550 million) in shares included in the Ibovespa stock index of the São Paulo
stock market (B3).
Up to the end of June 2020, the Committee had allocated R$ 396,2 million, distributed as to 36.1% in financial investments, 14.6% in
equity interests, and 49.3% in traded equities.

Melissa
Unlike the other lines, our Melissa products are not included in the self-service channels which remained open during 2Q20. Melissa’s
sales depend strongly on the ‘Melissa Clubes’, the great majority of which are in shopping malls. Since malls were closed for the greater
part of the quarter, the performance of this business unit was strongly affected.
The Clube Melissa franchise network had 329 ‘Melissa Clubes’ on June 30, 2020, comprising 312 Melissa Clubes and 17 ‘Mini-Clubes’ –
a new format for our children’s public. During the half-year, 13 clubs closed as a result of the effects of the Coronavirus, in spite of all
the support supplied by the Company to minimize these impacts.

Stores and franchises 1H19 1H20

Company stores 5 4
Brazil 3 2
Outside Brazil 2 2
Franchises 316 329

Operational results of 2Q20 and 1H20 (consolidated figures, IFRS)

Gross revenue from sales
With the lower volume of pairs sold, gross revenue was 83.5% lower year-on-year in 2Q20. The fall was spread equally between
all brands, models and geographical areas, simply reflecting the worldwide spread of the Covid-19 virus.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Gross revenue (R$ million) 497.1 82.1 (83.5%) 1,012.4 532.6 (47.4%)
Volume (million pairs) 30.1 4.3 (85.6%) 58.6 30.3 (48.3%)
Gross revenue per pair (R$) 16.50 18.92 14.7% 17.26 17.58 1.9%

Results for 2Q20 & 1H20 Page 5 of 20

 Media Release - 2Q20 and 1H20

497.1 1,012.4

532.6

82.1

2Q19 2Q20 1H19 1H20

Gross sales revenue (R$ mn) Gross sales revenue (R$ mn)

30.1 58.6

30.3

4.3

2Q19 2Q20 1H19 1H20

Volume (million pairs) Volume (million pairs)

18.92 17.58
16.50 17.26

2Q19 2Q20 1H19 1H20

Gross revenue per pair (R$) Gross revenue per pair (R$)

% of gross revenue from sales % of gross revenue from sales

19.6% 33.1% 21.7% 25.2%

80.4% 66.9% 78.3% 74.8%

2Q19 2Q20 1H19 1H20

Domestic market Exports Domestic market Exports

Share of volumes Share of volumes

17.9% 22.3% 21.0% 21.7%

82.1% 77.7% 79.0% 78.3%

2Q19 2Q20 1H19 1H20

Domestic market Exports Domestic market Exports

Results for 2Q20 & 1H20 Page 6 of 20

 Media Release - 2Q20 and 1H20

Gross revenue from sales – Domestic market

Due to the closing, or limitations on opening, of physical retailers, and the population’s inability to go out in the streets, sales in
2Q20 were 86.3% down, in revenue and in volume of pairs, compared to 2Q19.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Gross revenue, domestic market (R$ mn) 399.5 54.9 (86.3%) 793.0 398.4 (49.8%)
Volume – domestic market (million pairs) 24.7 3.4 (86.4%) 46.3 23.7 (48.8%)
Gross revenue/pair, domestic market (R$) 16.16 16.28 0.7% 17.12 16.80 (1.9%)

399.5 793.0

398.4

54.9

2Q19 2Q20 1H19 1H20

Gross sales revenue – Domestic mkt (R$ mn) Gross sales revenue – Domestic mkt (R$ mn)

24.7 46.3

23.7

3.4

2Q19 2Q20 1H19 1H20

Volume - Domestic market (million pairs) Volume - Domestic market (million pairs)

16.16 16.28 17.12 16.80

2Q19 2Q20 1H19 1H20

Gross rev. per pair – Domestic market (R$) Gross rev. per pair – Domestic market (R$)

Gross revenue from sales – Exports

Shutdown of production during a significant part of 2Q20 adversely affected exports:
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Gross revenue – exports (R$ million) 97.6 27.2 (72.2%) 219.4 134.2 (38.9%)
Gross revenue, exports (US$ million) 24.9 5.0 (79.8%) 57.1 27.3 (52.2%)
Volume – exports (million pairs) 5.4 0.9 (82.1%) 12.3 6.6 (46.6%)
Gross revenue/pair, exports (R$) 18.09 28.11 55.4% 17.81 20.38 14.4%
Gross revenue/pair, exports (US$) 4.62 5.22 13.0% 4.63 4.14 (10.6%)

Results for 2Q20 & 1H20 Page 7 of 20

 Media Release - 2Q20 and 1H20

219.4
97.6

134.2

27.2

2Q19 2Q20 1H19 1H20

Gross sales revenue – Exports (R$ mn) Gross sales revenue – Exports (R$ mn)

57.1
24.9

27.3
5.0

2Q19 2Q20 1H19 1H20

Gross sales revenue – Exports (US$ mn) Gross sales revenue – Exports (US$ mn)

12.3
5.4

6.6

0.9

2Q19 2Q20 1H19 1H20

Volume – Exports (million pairs) Volume – Exports (million pairs)

28.11
20.38
18.09 17.81

2Q19 2Q20 1H19 1H20

Gross rev. per pair – Exports (R$) Gross rev. per pair – Exports (R$)

5.22
4.62 4.63
4.14

2Q19 2Q20 1H19 1H20

Gross rev/pair – Exports (US$) Gross rev/pair – Exports (US$)

Data from the trade ministry, Secex and Abicalçados report Brazilian footwear exports in 1H20 as 31.2% lower in dollar terms
than in 1H19, 24.6% lower in number of pairs sold, and 8.8% lower in average price, in US$, per pair exported. In comparison,

Results for 2Q20 & 1H20 Page 8 of 20

 Media Release - 2Q20 and 1H20

Grendene’s export revenue in dollars was 52.2% lower, and volume of pairs exported was 46.6% lower, with average price per
pair exported 10.6% lower in US dollars. Grendene’s share in the volume of Brazilian footwear exported in 1H20 was 15.3% –
this compares with 21.5% in 1H19.

Net sales revenue

The retraction volumes was the main reason for net revenue lower in 2Q20 than 2Q19.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Net sales revenue 399.8 56.7 (85.8%) 823.1 428.9 (47.9%)

399.8 823.1

428.9

56.7

2Q19 2Q20 1H19 1H20

Net sales revenue (R$ mn) Net sales revenue (US$ mn)

Cost of goods sold (COGS)

Grendene selling expenses are predominantly variable items – mainly delivery, licenses, commissions, advertising and marketing;
their total was 63.7% lower in 2Q20 than in 2Q19, reflecting the adjustment to a lower level of activity, and the provision of R$
8.0 million for receivables from a client that applied for Judicial Recovery. They were a higher percentage of net revenue, due to
the fall in net revenue.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
COGS 244.2 33.1 (86.5%) 495.0 252.0 (49.1%)
COGS per pair (R$) 8.11 7.62 (6.0%) 8.44 8.32 (1.4%)

244.2 495.0

252.0

33.1

2Q19 2Q20 1H19 1H20

COGS (R$ mn) COGS (R$ mn)

8.11 8.44 8.32

7.62

2Q19 2Q20 1H19 1H20

COGS per pair (R$) COGS per pair (R$)

Results for 2Q20 & 1H20 Page 9 of 20

 Media Release - 2Q20 and 1H20

The chart below shows the movement in market prices (ICIS-LOR) in dollars, converted to Reais, of PVC resin, and the change in
level of Grendene’s average cost per pair, for the quarters of 2019 and 2020.
Thousands of pairs
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
28,528 30,121 43,239 48,975 25,963 4,340

10.0 R$8.79 R$8.43 10.00

R$8.11 R$7.62
R$7.02 R$6.70
8.0 8.00
R$ ’000 / ton.

R$ / pair
6.0 6.00
4.0 4.00
2.0 2.00
- -
Jun-19

Nov-19

Jun-20
Dec-19
Jul-19

Oct-19
Feb-19

Apr-19

Sep-19

Feb-20

Apr-20
Mar-19

May-19

Aug-19

Mar-20

May-20
Jan-19

Jan-20
PVC resin / ton. (CFR) – R$ COGS per pair – R$

Sources: Petrochemicals prices from ICIS-LOR; Grendene quarterly data.

Gross profit and gross margin

Even with lower sales, gross margin was higher YoY, at 41.7%, in 2Q20
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Gross profit 155.6 23.6 (84.8%) 328.0 176.9 (46.1%)
Gross margin, % 38.9% 41.7% 2.8 p.p. 39.9% 41.2% 1.3 p.p.

41.7% 39.9% 41.2%

38.9%

155.6 328.0
23.6 176.9

2Q19 2Q20 1H19 1H20

Gross profit (R$ mn) Gross margin, % Gross profit (R$ mn) Gross margin, %

Selling expenses
Grendene’s selling expenses are predominantly variable items – mainly freight, licenses, commissions, advertising and marketing,
and were 63.7% lower in 2Q20 than in 2Q19, reflecting the adjustment to a lower level of activity and, due to provision of R$ 8.0
million in receivables from a client that applied for Judicial Recovery. Selling expenses were higher in percentage terms, due to the
lower net revenue.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Selling expenses 124.7 45.3 (63.7%) 227.1 138.3 (39.1%)
% of Net revenue 31.2% 79.8% 48.6 p.p. 27.6% 32.2% 4.6 p.p.

Results for 2Q20 & 1H20 Page 10 of 20

 Media Release - 2Q20 and 1H20

124.7 79.8% 32.2%

27.6%

31.2%
45.3 227.1
138.3

2Q19 2Q20 1H19 1H20

Selling expenses (R$ mn) % of NOR Selling expenses (R$ mn) % of NOR

Advertising expenses
Advertising expenses were lower, reflecting the adjustment to the lower level of activity.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Advertising expenses 24.1 6.2 (74.4%) 41.1 21.1 (48.6%)
% of Net revenue 6.0% 10.9% 4.9 p.p. 5.0% 4.9% (0.1 p.p.)

10.9% 5.0% 4.9%

24.1

6.0%

6.2 41.1
21.1

2Q19 2Q20 1H19 1H20

Advertising expenses (R$ mn) % of NOR Advertising expenses (R$ mn) % of NOR

General and administrative (G&A) expenses

G&A expenses were 35.1% lower in 2Q20 than in 2Q19. Personnel expenses was the item that contributed most strongly to this
reduction, due to the reduction of working hours and salaries in this period.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
G&A 22.8 14.8 (35.1%) 45.1 34.8 (22.9%)
% of Net revenue 5.7% 26.1% 20.4 p.p. 5.5% 8.1% 2.6 p.p.

22.8 26.1% 45.1 8.1%

14.8 5.5%

5.7% 34.8

2Q19 2Q20 1H19 1H20

G&A (R$ mn) % of NOR G&A (R$ mn) % of NOR

Results for 2Q20 & 1H20 Page 11 of 20

 Media Release - 2Q20 and 1H20

Ebit and Ebitda

Ebit:
Ebit (earnings before interest and taxes – operational profit before financial effects) Grendene believes that because it has a
high cash position which generates significant financial revenues, the operational profit of its activity, characterized by Ebit –
Earnings before interest and taxes – is a better indicator of its operational performance.

43.6
10.1

(45.6)
(85.3)

2Q19 2Q20 1H19 1H20

Ebit (formal accounting) - R$ mn Ebit (formal accounting) - R$ mn

77.0
26.7

(2.4)

(63.2)

2Q19 2Q20 1H19 1H20

Ebitda (formal accounting) - R$ mn Ebitda (formal accounting) - R$ mn

Reconciliation of Ebit and Ebitda*

Change, % Change, %
R$ ’000 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Recurring net profit for the period 52,847 11,640 (78.0%) 143,376 41,377 (71.1%)
Non-recurring effect (11,325) (55,995) 394.4% (25,334) (55,995) 121.0%
Accounting Net profit for the period 41,522 (44,355) - 118,042 (14,618) -
Taxes on profit 20,340 4,380 (78.5%) 28,516 4,277 (85.0%)
Net financial revenue (expenses) (51,786) (45,308) (12.5%) (102,952) (35,296) (65.7%)
Accounting Ebit 10,076 (85,283) - 43,606 (45,637) -
Non-recurring item 11,325 55,995 394.4% 25,334 55,995 121.0%
Recurring Ebit 21,401 (29,288) - 68,940 10,358 (85.0%)
Depreciation and amortization 16,659 22,094 32.6% 33,381 43,247 29.6%
Accounting Ebitda 26,735 (63,189) - 76,987 (2,390) -
Recurring Ebitda 38,060 (7,194) - 102,321 53,605 (47.6%)
* Stated as per CVM Instruction 527 of October 4, 2012.

Change, % Change, %
Reconciliation of Ebit margin and Ebitda * 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Ebit margin (formal accounting),% 2.5% (150.3%) (152.8 p.p.) 5.3% (10.6%) (15.9 p.p.)
Recurring Ebit margin,% 5.4% (65.8%) (57.0 p.p.) 8.4% 2.4% (6.0 p.p.)
Ebitda margin (formal accounting),% 6.7% (111.4%) (118.1 p.p.) 9.4% (0.6%) (10.0 p.p.)
Recurring Ebitda margin,% 9.5% (26.8%) (22.2 p.p.) 12.4% 12.5% (0.1 p.p.)

Results for 2Q20 & 1H20 Page 12 of 20

 Media Release - 2Q20 and 1H20

Ebitda:
Our business is low-capital intensive. Grendene regularly invests an amount equivalent to its depreciation to keep its production
capacity updated. It also maintains positive net cash, and has no costs of interest that need to be paid with funds from operations.
As a result we believe that analyzing Ebit makes more sense as an indicator for management’s operational performance.
68.9
21,4
10,3

(29,3)

2Q19 2Q20 1H19 1H20

Recurring Ebit (R$ mn) Recurring Ebit (R$ mn)

38.1 102.3

53,6

(7,2)
1H19 1H20

2Q19 2Q20

Recurring Ebitda (R$ mn) Recurring Ebitda (R$ mn)

Net financial revenue (expenses)

For 2Q20 Grendene reports Net financial revenues, of R$ 45.3 mn, as follows:
Change, % Change, %
(R$ mn) 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Interest received from clients 562 459 (18.3%) 1,009 731 (27.6%)
Revenue from cash investments 42,885 17,623 (58.9%) 80,524 46,031 (42.8%)
Other financial revenues 964 1,511 56.7% 1,823 2,325 27.5%
Subtotal 44,411 19,593 (55.9%) 83,356 49,087 (41.1%)
Costs of financings (2,268) (1,195) (47.3%) (4,551) (3,253) (28.5%)
Cofins and PIS taxes on Financial revenues (2,084) (985) (52.7%) (3,920) (2,545) (35.1%)
Other financial expenses (1,528) (933) (38.9%) (2,441) (1,839) (24.7%)
Subtotal (5,880) (3,113) (47.1%) (10,912) (7,637) (30.0%)
Net financial revenue (expenses)(1) 38,531 16,480 (57.2%) 72,444 41,450 (42.8%)
Operational revenue on FX derivatives – B3 10,234 22,507 119.9% 25,298 22,507 (11.0%)
Foreign exchange gains 8,713 18,032 107.0% 31,094 81,417 161.8%
Subtotal 18,947 40,539 114.0% 56,392 103,924 84.3%
Operational expenses on FX derivatives – B3 (4,859) (34,630) 612.7% (14,398) (97,996) 580.6%
Expenses of FX variation (9,664) (15,131) 56.6% (32,367) (59,995) 85.4%
Subtotal (14,523) (49,761) 242.6% (46,765) (157,991) 237.8%
Net gain (loss) on FX variations(2) 4,424 (9,222) (308.5%) 9,627 (54,067) (661.6%)
Adjustments to present value (APV) 8,831 5,268 (40.3%) 20,881 15,131 (27.5%)
Fair value of equity financial instruments - 32,782 100.0% - 32,782 100.0%
Financial result – APV (3) 8,831 38,050 330.9% 20,881 47,913 129.5%
Net financial revenue (expenses): (1) + (2) + (3) 51,786 45,308 (12.5%) 102,952 35,296 (65.7%)

Results for 2Q20 & 1H20 Page 13 of 20

 Media Release - 2Q20 and 1H20

Net profit (loss)

Our net profit (loss) was 206.8% lower in 2Q20 than in 2Q19. The main effect was lower volume of pairs sold, and non-recurring
expenses relating to Covid-19.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Net profit (loss) 41.5 (44.4) - 118.0 (14.6) -
Net margin, % 10.4% (78.2%) (88.6 p.p.) 14.3% (3.4%) (17.7 p.p.)

118.0

41.5

(14.6)
(44.4)

2Q19 2Q20 1H19 1H20

Net profit (loss) (R$ mn) Net profit (loss) (R$ mn)

Capex (fixed and intangible assets)

Our investments in 1H20 were in: maintenance of industrial buildings and facilities; replacement of fixed assets; acquisition of
new equipment for modernization of the manufacturing plant; and various projects to improve the company’s efficiency.
Change, % Change, %
R$ mn 2Q19 2Q20 1H19 1H20
2Q19–2Q20 1H19–1H20
Capex 13.9 13.1 (5.5%) 28.5 24.0 (15.6%)

Cash generation
In 1H20, cash generated from operations, of R$ 356.1 mn, was allocated for payment of: investments, and subscription of capital, in
subsidiaries and affiliated companies, a net total of R$ 26.4 million; acquisition of PP&E and intangible items – R$ 24.0 million; net cash
investments of R$ 125.3 million; payment of R$ 129.8 mn in dividends and Interest on Equity; a negative result of R$ 6.7 million on
transactions in treasury shares for exercise of stock options; and payment of net R$ 42.1 mn in loans, financings and leasing obligations.
This resulted in the amount held in cash and cash equivalents being R$ 1.8 mn higher. The complete cash flow is in Appendix IV.

Net cash and cash equivalents

Grendene continues to maintain a solid financial situation. Net cash (cash, cash equivalents and short and long-term financial
investments, less short and long-term loans and financings) on June 30, 2020 totaled R$ 2.2 billion, or 9.2% more than at December 31,
2019 (R$ 2.0 billion).
The proportion of 12-month net revenue held in cash and cash equivalents and cash investments increased from 101.3% at December
31, 2019 to 137.4% at June 30, 2020.
Changes in the cash position (Cash, Cash equivalents and short and long-term Financial investments), loans and financings and net cash
are as follows:
Mar. 31, June. 30, Sep. 30, Dec. 31, Mar. 31, Jun 30,
R$ mn
2019 2019, 2019 2019 2020 2020
Cash and cash equivalents plus cash investments (ST and LT) 2,334,179 2,155,512 2,158,049 2,096,971 2,305,015 2,304,351
Loans and financings (ST and LT) (237,399) (122,432) (76,189) (95,192) (229,206) (118,745)
Net cash 2,096,780 2,033,080 2,081,860 2,001,779 2,075,809 2,185,606

Results for 2Q20 & 1H20 Page 14 of 20

 Media Release - 2Q20 and 1H20

Net cash (R$ mn)

2,096.8 2,033.1 2,081.9 2,001.8 2,075.8 2,105.6

03/31/19 06/30/19 09/30/19 12/31/19 03/31/20 06/30/20

Value indicators

Cash and cash equivalents + Net working capital, per share Book value per share
cash investments, per share(R$)
3.80 3.94
3.05
2.39 2,55 2.14

06/30/19 06/30/20 06/30/19 06/30/20 06/30/19 06/30/20

Earnings per share Stock price Price / Earnings

(last 12 months)
7.80 18,33
7.33 14.72

0.53 0,40

06/30/19 06/30/20 06/30/19 06/30/20 06/30/19 06/30/20

P&L for the first half of 2020

Below is the profit and loss account for the first half of 2020. For the first quarter of 2020 management opted not to propose
payment of an interim dividend, due to the effects caused by the Covid-19 crisis on the economy and on the Company’s activities
– these included the shutdown of manufacturing activity, with a negative effect on the Company’s results in the second quarter
so that no profit was generated to be distributed in that period. This decision in no way alters the Company’s Dividend Policy
and the provisions of Clause 34 of its Bylaws.
Profit and loss account for first half 2020
Grendene S.A. (Holding company) R$

Net profit (loss) for the period (14,618,433.49)

Profit (loss) for 1H20 (14,618,433.49)

Corporate events
May 14, 2020: Meeting of the Board of Directors – Approved: the financial information for the first quarter of 2020, allocation
of the profit for the first quarter of 2020, and the individual remuneration of the management.
June 1, 2020: Material Announcement – Notice of partial resumption of activity at the Crato and Fortaleza manufacturing plants,
and resumption of manufacturing at the Sobral unit, in Ceará.
June 8 and 15, 2020: Material Announcements – Notice of postponement of reopening of activity at the Sobral plant, in Ceará.

Results for 2Q20 & 1H20 Page 15 of 20

 Media Release - 2Q20 and 1H20

June 7, 2020: Annual General Meeting – This meeting approved: the Report of Management and the financial statements for
the 2019 business year; allocation of the profit for the year, and ratification of the interim distribution of Interest on Equity and
the balance of dividends for the 2019 business year; and the global remuneration of the managers in accordance with Clause 14
of the Bylaws; and elected seven members to the Board of Directors, of whom two are independent board members, for a period
of office of two years; and the Audit Board for the 2020 business year.
July 10, 2020: Material Announcement – Notice of resumption of activities in all the units in Brazil, in accordance with the
municipal and state decrees in effect.
July 15, 2020: Meeting of the Board of Directors – This meeting approved the contracting of Banco Bradesco S.A. to be the
depositary financial institution for the shares of Grendene S.A. Service to holders of the shares by the Bradesco branch network
began on August 3, 2020.
July 15, 2020: Market Notice – As from August 3, 2020, Banco Bradesco S.A. (‘Bradesco’) is the depositary institution for the
book-entry shares of Grendene S.A.

Capital markets
In 1H20, including reinvestment of dividends, the share price of Grendene (B3 ticker: GRND3) fell by 39.0%, compared to a decline
in the Ibovespa index of 17.8% in the same period. Average daily trading volume was R$16.6 mn in 1H20 (R$8.2mn in 1H19).
In this table, the number of shares traded, financial volume, and daily average trading:
Price R$ Average no. of shares Average volume, R$
No. of
Period trading No. of trades No. of shares Volume R$
Weighted
sessions Close Per trade Daily Per trade Daily
average

1H19 122 363,767 125,094,400 R$ 1,005,388,291 R$ 8.04 R$ 7.80 344 1,025,364 R$ 2,763,82 R$ 8,240,887,63

1H20 123 824,082 238,396,800 R$ 2,047,587,974 R$ 8.59 R$ 7.33 289 1,938,185 R$ 2,484,69 R$ 16,647,056,70

The lowest market price for GRND3 in the 52 weeks to June 30, 2020 was R$ 5.95, on May 14, 2020.
The high for the 52-week period was R$ 12.99 on January 7, 2020.
This chart shows the performance of Grendene ON shares compared to the Bovespa index (Base: Dec. 31, 2019 = 100), and daily
trading volume.

GRND3 – Daily trading volume and stock price vs. Ibovespa

64 125
56
Base: Dec. 31, 2019 = 100

100
Volume – R$ million

48
40 75
32
24 50
16
25
8
- 0
31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 30/06/20

Daily trading volume – R$ GRND3 – with reinvestment of dividends Ibovespa

Information in this release may contain statements about future outcomes. Such statements reflect the present perception and outlook of the Company's
Executive Officers on the development of the business, based on developments in the macroeconomic environment, industry conditions, performance of
the Company and financial results. Any outcomes that are different from such expectations and factors could cause the Company’s results to be materially
different from current expectations. Such statements and potential outcomes thus include various risks and uncertainties.

Results for 2Q20 & 1H20 Page 16 of 20

 Media Release - 2Q20 and 1H20

Appendix I – Consolidated gross revenue, volumes, gross revenue per pair and market share
Gross revenue Change, %, Change, %,
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
(R$ mn) 2Q19–2Q20 1H19–1H20

Domestic market 393,527 399,475 582,711 603,802 343,518 54,918 (86.3%) 793,002 398,436 (49.8%)
Exports 121,776 97,669 123,122 191,219 107,006 27,179 (72.2%) 219,445 134,185 (38.9%)
Exports (US$) 32,296 24,923 30,985 46,443 24,003 5,044 (79.8%) 57,077 27,255 (52.2%)
Total 515,303 497,144 705,833 795,021 450,524 82,097 (83.5%) 1,012,447 532,621 (47.4%)

Volume Change. %. Change. %.

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
Thousands of pairs 2Q19–2Q20 1H19–1H20
Domestic market 21,608 24,721 35,583 38,089 20,345 3,373 (86.4%) 46,329 23,718 (48.8%)
Exports 6,920 5,400 7,656 10,886 5,618 967 (82.1%) 12,320 6,585 (46.6%)
Total 28,528 30,121 43,239 48,975 25,963 4,340 (85.6%) 58,649 30,303 (48.3%)

Gross revenue Change. %. Change, %,

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
- per pair (R$) 2Q19–2Q20 1H19–1H20
Domestic market 18.21 16.16 16.38 15.85 16.88 16.28 0.7% 17.12 16.80 (1.9%)
Exports 17.60 18.09 16.08 17.57 19.05 28.11 55.4% 17.81 20.38 14.4%
Exports (US$) 4.67 4.62 4.05 4.27 4.27 5.22 13.0% 4.63 4.14 (10.6%)
Total 18.06 16.50 16.32 16.23 17.35 18.92 14.7% 17.26 17.58 1.9%

US dollar Change. %. Change, %,

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
(USD 1.00 = R$) 2Q19–2Q20 1H19–1H20
US$ at end of period 3.8967 3.8322 4.1644 4.0307 5.1987 5.4760 42.9% 3.8322 5.4760 42.9%
Average US$ 3.7706 3.9188 3.9736 4.1173 4.4581 5.3885 37.5% 3.8447 4.9233 28.1%

Gross revenue
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
% of total
Domestic market 76.4% 80.4% 82.6% 75.9% 76.2% 66.9% 78.3% 74.8%
Exports 23.6% 19.6% 17.4% 24.1% 23.8% 33.1% 21.7% 25.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Volume, pairs
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1H19 1H20
% of total
Domestic market 75.7% 82.1% 82.3% 77.8% 78.4% 77.7% 79.0% 78.3%
Exports 24.3% 17.9% 17.7% 22.2% 21.6% 22.3% 21.0% 21.7%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Results for 2Q20 & 1H20 Page 17 of 20

 Media Release - 2Q20 and 1H20

Appendix II – Consolidated Statement of financial position, IFRS (R$ ’000)

Change %,
December 31, June 30,
Assets % of total % of total Dec. 31, 2019
2019 2020
– June 30, 2020
Current 2,654,724 65.3% 2,186,558 56.1% 82.4%
Cash and cash equivalents 18,072 0.4% 19,822 0.5% 109.7%
Cash investments 1,314,338 32.3% 1,253,090 32.1% 95.3%
Accounts receivable from clients 908,297 22.3% 436,209 11.2% 48.0%
Inventories 277,106 6.8% 284,599 7.3% 102.7%
Tax credits 87,446 2.2% 75,763 1.9% 86.6%
Income and Social Contribution taxes recoverable 276 - 25,222 0.6% 9,138.4%
Trade bills receivable 19,063 0.5% 17,281 0.4% 90.7%
Prepaid costs and expenses 7,719 0.2% 19,070 0.5% 247.1%
Other credits 22,407 0.6% 55,502 1.4% 247.7%
Non-current 1,409,723 34.7% 1,714,514 43.9% 121.6%
Non-current assets 860,663 21.2% 1,047,477 26.9% 121.7%
Cash investments 764,561 18.8% 1,031,439 26.4% 134,9%
Escrow deposits made 1,164 - 2,057 0.1% 176.7%
Tax credits 1,014 - 822 - 81.1%
Deferred income tax and Social Contribution tax 49,287 1.2% 45,030 1.2% 91.4%
Trade bills receivable 37,247 0.9% 37,147 1.0% 99.7%
Other credits 7,390 0.2% 10,982 0.3% 148.6%
Investments 31,898 0.8% 58,279 1.5% 182.7%
Property, plant and equipment 484,823 11.9% 494,046 12.7% 101.9%
Intangible 32,339 0.8% 34,712 0.9% 107.3%
Total assets 4,064,447 100.0% 3,901,072 100.0% 96.0%

Change %,
December 31, June 30,
Liabilities and Stockholders’ equity % of total % of total 12/31/2019 –
2019 2020
6/30/2020
Current 297,942 7.3% 251,683 6.5% 84.5%
Loans and financings 77,110 1.9% 105,548 2.7% 136.9%
Leasing contracts 15,768 0.4% 21,096 0.5% 133.8%
Suppliers 27,845 0.7% 19,291 0.5% 69.3%
Contractual obligations – Licenses 20,641 0.5% 9,675 0.2% 46.9%
Commissions payable 45,191 1.1% 19,355 0.5% 42.8%
Taxes 29,515 0.7% 7,670 0.2% 26.0%
Income tax and Social Contribution tax payable 5,780 0.1% 11 - 0.2%
Salaries and related charges payable 55,666 1.4% 44,522 1.1% 80.0%
Provision for labor and tax risks 2,780 0.1% 2,703 0.1% 97.2%
Advances from clients 17,181 0.4% 20,285 0.5% 118.1%
Other accounts payable 465 - 1,527 - 328.4%
Non-current 84,069 2.1% 90,612 2.3% 107.8%
Loans and financings 18,082 0.4% 13,197 0.3% 73.0%
Leasing contracts 64,205 1.6% 75,416 1.9% 117.5%
Provision for labor and Civil cases risks 381 - 377 - 99.0%
Other debits 1,401 - 1,622 - 115.8%
Stockholders’ equity 3,682,436 90.6% 3,558,777 91.2% 96.6%
Share capital 1,231,302 30.3% 1,231,302 31.6% 100.0%
Capital reserves 6,658 0.2% 2,591 0.1% 38.9%
Shares in Treasury (3,928) (0.1%) (1,154) - 29.4%
Profit reserves 2,428,454 59.7% 2,310,651 59.2% 95.1%
Retained earnings (loss) - - (14,618) (0.4%) -
Other comprehensive income 19,950 0.5% 30,005 0.8% 150.4%
Total liabilities and Stockholders’ equity 4,064,447 100.0% 3,901,072 100.0% 96.0%

Results for 2Q20 & 1H20 Page 18 of 20

 Media Release - 2Q20 and 1H20

Appendix III – Consolidated Profit and loss account for 2Q20 and 2Q19 (R$ ’000)
Change %,
R$ ’000 2Q19 NOR 2Q20 NOR
2Q19–2Q20
Domestic market 399,475 99.9% 54,918 96.8% (86.3%)
Exports 97,669 24.4% 27,179 47.9% (72.2%)
Gross revenue from sales and services 497,144 124.3% 82,097 144.7% (83.5%)
Sales returns and sales taxes (78,462) (19.6%) (23,446) (41.3%) (70.1%)
Discounts given to clients (18,870) (4.7%) (1,927) (3.4%) (89.8%)
Deductions from sales (97,332) (24.3%) (25,373) (44.7%) (73.9%)
Net sales revenue 399,812 100.0% 56,724 100.0% (85.8%)
Cost of goods sold (244,242) (61.1%) (33,082) (58.3%) (86.5%)
Gross profit 155,570 38.9% 23,642 41.7% (84.8%)
Operational revenues (expenses) (145,494) (36.4%) (108,925) (192.0%) (25.1%)
Selling expenses (124,713) (31.2%) (45,292) (79.8%) (63.7%)
G&A (22,838) (5.7%) (14,831) (26.1%) (35.1%)
Other operational revenues 1,537 0.4% 1,426 2.5% (7.2%)
Other operational expenses 520 0.1% (2,248) (4.0%) (532.3%)
Non-recurring expenses (Covid-19) - - (47,980) (84.6%) 100.0%
Ebit (Operational profit before Fin. rev (exp.) and taxes) 10,076 2.5% (85,283) (150.3%) (946.4%)
Financial revenues 70,105 17,5% 97,197 171.4% 38.6%
Financial expenses (18,319) (4.6%) (51,889) (91.5%) 183.3%
Net financial revenue (expenses) 51,786 13.0% 45,308 79.9% (12.5%)
Pretax profit 61,862 15.5% (39,975) (70.5%) (164.6%)
Income tax and Social Contribution tax:
Current 15,124 3.8% (1,545) (2.7%) (110.2%)
Deferred (35,464) (8.9%) (2,835) (5.0%) (92.0%)
Net profit (loss) for the period 41,522 10.4% (44,355) (78.2%) (206.8%)
Depreciation and amortization 16,659 4.2% 22,094 39.0% 32.6%
Ebitda 26,735 6.7% (63,189) (111.4%) (336.4%)

Change %,
R$ ’000 1H19 NOR 1H20 NOR
1H19–1H20
Domestic market 793,002 96.3% 398,436 92.9% (49.8%)
Exports 219,445 26.7% 134,185 31.3% (38.9%)
Gross revenue from sales and services 1,012,447 123.0% 532,621 124.2% (47.4%)
Sales returns and sales taxes (150,163) (18.2%) (82,451) (19.2%) (45.1%)
Discounts given to clients (39,208) (4.8%) (21,260) (5.0%) (45.8%)
Deductions from sales (189,371) (23.0%) (103,711) (24.2%) (45.2%)
Net sales revenue 823,076 100.0% 428,910 100.0% (47.9%)
Cost of goods sold (495,030) (60.1%) (252,004) (58.8%) (49.1%)
Gross profit 328,046 39.9% 176,906 41.2% (46.1%)
Operational revenues (expenses) (284,440) (34.6%) (222,543) (51.9%) (21.8%)
Selling expenses (227,143) (27.6%) (138,290) (32.2%) (39.1%)
G&A (45,132) (5.5%) (34,775) (8.1%) (22.9%)
Other operational revenues 2,697 0.3% 2,492 0.6% (7.6%)
Other operational expenses (14,862) (1.8%) (3,990) (0.9%) (73.2%)
Non-recurring expenses (Covid-19) - - (47,980) (11.2%) 100.0%
Ebit (Operational profit before Fin. rev (exp.) and taxes) 43,606 5.3% (45,637) (10.6%) (204.7%)
Financial revenues 156,709 19.0% 198,379 46.3% 26.6%
Financial expenses (57,757) (6.5%) (163,083) (38.0%) 203.4%
Net financial revenue (expenses) 102,952 12.5% 35,296 8.2% (65.7%)
Pretax profit 146,558 17.8% (10,341) (2.4%) (107.1%)
Income tax and Social Contribution tax:
Current 8,710 1.1% (20) - (100.2%)
Deferred (37,226) (4.5%) (4,257) (1.0%) (88.6%)
Net profit (loss) for the period 118,042 14.3% (14,618) (3.4%) (112.4%)
Depreciation and amortization 33,381 4.1% 43,247 10.1% 29.6%
Ebitda 76,987 9.4% (2,390) (0,6%) (103,1%)

Results for 2Q20 & 1H20 Page 19 of 20

 Media Release - 2Q20 and 1H20

Appendix IV – Consolidated Statement of cash flow, 1H20 and 1H19 (R$ ’000)
1H 2019 1H 2020
Cash flow from operations
Net profit (loss) for the period 118,042 (14,618)
Adjustments reconciling profit to cash from operations
Depreciation and amortization 33,381 43,247
Deferred income tax and Social Contribution tax 37,226 4,257
PP&E and Intangible – residual value after write-down 2,285 379
Stock options plan 2,311 890
Items reducing Accounts receivable from clients (4,791) (20,670)
Provision for obsolete inventory (1,815) 2,554
Provision for employment-law, tax, and third-party risks (942) (81)
Interest expense on loans, financings and leasing contracts 792 3,199
Interest revenue on cash investments (79,770) (45,936)
Fair value of equity financial instruments - (34,381)
FX variations, net 3,674 57,871
110,393 (3,289)
Variations in assets and liabilities:
Accounts receivable from clients 357,550 492,758
Inventories (23,975) (10,047)
Other accounts payable (55,910) (60,120)
Suppliers (10,831) (8,554)
Salaries and related charges payable (3,410) (11,144)
Taxes 728 (5,345)
Income tax and Social Contribution tax payable (5,946) (5,769)
Advances from clients (11,379) 3,104
Other accounts payable (21,149) (35,519)
Net cash from operational activities 336,071 356,075

Cash flow from investment activities:

Investment in affiliated companies - (26,690)
Return on capital invested in affiliated companies - 5,182
Subscription of capital in jointly-controlled subsidiaries and affiliates - (4,873)
Acquisitions of fixed and intangible assets (28,464) (24,031)
Cash investments (1,535,084) (1,738,720)
Redemption of cash investments 1,397,346 1,563,663
Interest received 40,289 49,744
Net cash flow used in investment activities (125,913) (175,725)

Cash flow in financing activities:

Loans obtained 194,563 142,379
Payments of loans, financings and leasing contracts (229,250) (183,714)
Interest paid on loans, financings and leasing contracts (596) (779)
Dividends paid (50,200) (19,741)
Interest on Equity paid (130,000) (110,000)
Acquisition of treasury shares - (12,289)
Sale of treasury shares: exercise of stock options 6,660 5,544
Net cash used in financing activities (208,823) (178,600)

Increase in cash and cash equivalents 1,335 1,750

Initial balance of Cash and cash equivalents 16,562 18,072

Final balance of Cash and cash equivalents 17,897 19,822

Results for 2Q20 & 1H20 Page 20 of 20